Super Micro Computer (SMCI) stock surges in pre-market trading after raising its 2024 revenue forecast to exceed $14 billion. The information tech company beat on fiscal second-quarter earnings estimates, posting $3.67 billion in revenue and adjusted earnings gains of $5.59 per share.

From the floor of the New York Stock Exchange, Yahoo Finance Reporter Madison Mills breaks down Super Micro's 2024 guidance as it fits into the new year's AI environment.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

SEANA SMITH: It's time for our stock to watch, and that is Super Micro Computer. You're looking at shares surging ahead of the open up, nearly 10%. The company forecasting stronger than expected sales for the full year. And that's further fueling this rally that we have seen in the name. "Yahoo Finance's" Madison Mills on the floor of the New York Stock Exchange with the latest, Mady.

MADISON MILLS: If you were listening to our program on January 19, you are up 17% if you grabbed SMCI on that day. That was the day that they updated their guidance, giving investors a clue that they were going to have better than anticipated earnings results. And that's exactly what happened in the past 24 hours.

That's why we're seeing this name up a whopping 36% on that day, January 19, up 10% in the pre-trade this morning. Continuing to rise off of these better than expected results. They beat on the top and bottom line. Their expected revenue was a huge bump as well. They expected $10 to $11 billion for 2024. They updated that to over $14 billion in revenue. So just a huge beat there.

And this is our stock to watch this morning, because this is a way to play the AI trade. Particularly if you don't want to get into some of those overvalued, more expensive name, something like an NVIDIA or an AMD even. We are seeing SMCI hitting record highs this morning. But still, some of my sources saying it's trading at a relatively stable valuation compared to some of those other AI names.

Now we do hear from AMD later today. We're still anticipating earnings from NVIDIA. So we're awaiting those results. But remember that SMCI, they're a storage play for the AI space. That AI that we all utilize takes up a lot of storage. So you're going to want to see how an SMCI performs as an indication of how the overall AI space is going.

They have customers like a NASA, who are using up SMCI's storage, their data centers as a place to put all of the data that they need stored. And that's why we're going to want to continue to watch SMCI as an indication of just how big the AI play continues to get.